Tories wield the deficit truncheon

In predicting a $50 billion deficit last week, Finance Minister Jim Flaherty was quick to centre-stage the role of the unemployed and his other favourite whipping boy – the autoworkers – in soaking up government funds and pushing us deeper into debt.

Flaherty seemed keen to deflect public wrath onto these ill-fated workers, clearly victims of the global economic meltdown triggered by Wall Street. Most of them have probably never even been to Wall Street, let alone flipped asset-backed securities inside hedge fund portfolios.

Still, many are now unemployed, and that means an extra $4 billion in employment insurance costs borne by Canadian taxpayers. (On the other hand, for years workers have paid more in EI premiums than they’ve received in benefits. Indeed, since the early 1990s, they’ve paid $57 billion more than they’ve received, with the money going into government coffers.)

And is it fair to consider the $10 billion going to the auto industry as part of the deficit, when it’s a loan – not unlike the $200 billion in loans and asset swaps which the Bank of Canada made to Canadian banks earlier this year?

Flaherty made no attempt last week to link the bulging deficit to bankers.

Meanwhile, lost in the mists of time, are the massive tax cuts introduced by Flaherty in 2006 and 2007. Without those cuts to the GST and personal and corporate taxes – worth $34 billion this year, according to the budget – Ottawa’s deficit would be much smaller.

Of course, it wasn’t clear back then that the world economy would collapse. But it was clear that massive tax cuts would serve the Harper agenda, no matter what the shape of the economy.

The Harper agenda has always been about reducing spending on government programs – with the exception of the military, which under Harper has swelled to almost $20 billion this year. Why not link the bulging deficit then to military contractors?

Let’s not forget that Stephen Harper, only a decade ago, was head of the fiercely right-wing National Citizens Coalition – a job he presumably took because he shared the NCC’s deep hostility towards medicare and other social programs.

In the early 2000s – when Michael Ignatieff was at Harvard urging his fellow Americans to go to war in Iraq – Harper was right here attacking Canada, describing his homeland as a “second-tier socialistic country.”

As Prime Minister, Harper has been more careful about slagging Canada and Canadian ways. And he inherited massive surpluses from the Liberals, making it hard to justify cuts to popular social programs.

But cutting taxes accomplished much the same thing. If the government has no surplus revenue – or is running a deficit – the cupboard will be bare, providing the perfect excuse for holding the line on social spending.

The tragedy is not the $50 billion deficit, which is understandably large due to the recession. Indeed, more stimulus is needed.

The tragedy is that, despite a decade of huge budget surpluses, neither the Liberals nor the Conservatives invested in our public services – in health care, education, public transit, employment insurance.

Such investment would have distributed benefits far more widely than tax cuts, positioning us much better to weather the current economic storm.

Now, whichever party is in power will surely swing that big deficit like a truncheon, clobbering any request for the public investment that’s suddenly farther out of reach than ever.